The Pakistan rupee has been steadily losing its sheen. In January this year, the value of a Pakistan rupee was pegged at 159.6 to a US dollar on an average. Its current value is 167.05 to a dollar. When Prime Minister Imran Khan assumed office in August 2018, the value of the Pakistani rupee was around 121-122 to a dollar. Clearly, since the time Khan took over, the currency has depreciated over 40 per cent.
The devaluation of the currency would further add pressure on the debt burden as imports will become costlier. And this is when the country’s food imports went up significantly. Naturally, the worst impacted are the country’s poor even as the Pakistan administration continues to focus on aiding the Taliban in Afghanistan.
Also read: Pakistan's financial meltdown may dampen euphoria over Taliban's gains in Afghanistan
In 2020-21, Pakistan’s food trade deficit touched $3.954 billion in 2020-21 up from $817 million in 2019-20. The country had to spend over $8 billion on imports of edible items in the last financial year, Dawn newspaper reported.
Among other things, wheat, sugar, wheat and pulses were the main items imported from outside. Several analysts even said that the food imports could further rise as there could be an influx of refugees from Afghanistan.
The rising current account deficit (CAD)—the difference between inflow and outflow of dollars and import expenditures have led to the thinning of the foreign exchange from the country. “The problem with Pakistan is that it has remained focused on activities other than economy..for the country, priorities for the country continue to be activities outside its borders and that is the sad tale,” a foreign policy expert told India Narrative.
“Though Pakistan’s economy has rarely been on stable grounds, for the past three years we have been on a rollercoaster ride most of the time. The exchange rate has been fluctuating and now the US dollar is touching the 167 rupees mark showing a considerable depreciation of Pak currency since 2018,” Pakistan-based the News International said.
Since 2018, the country’s overall debt also grew by Rs 149 trillion. This is even more ironic as one of the main promises made by Khan was to reduce debt. According to the State Bank of Pakistan (SBP) data, the public debt increased to Rs39.9 trillion by June this year, which is an addition of Rs14.9 trillion in just three years.
However, the silver lining: The country received $2.5 billion from the International Monetary Fund in its Special Drawing Rights late last month.
“This will give the Khan government the much required cushion,” the analyst said.
